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Hartley v. Bank of America, N.A.

United States District Court, W.D. Washington, Seattle

March 7, 2017

ROBIN D. HARTLEY, et al., Plaintiffs,
BANK OF AMERICA, N.A., et al., Defendants.


          Robert S. Lasnik United States District Judge

         This matter comes before the Court on the “Defendant Bank of America, N.A.'s Motion to Dismiss Plaintiffs' Complaint.” Dkt. # 20. Plaintiffs filed this lawsuit against a number of lenders, loan servicers, trustees, and other banking institutions alleging technical errors and illegal acts that delayed plaintiffs' ability to modify their home loan and caused damage. Bank of America “(BoA”) seeks dismissal of all claims asserted against it, arguing that they are not plausible based on the facts alleged. Having reviewed the complaint, the attached exhibits, and the memoranda submitted by the parties, the Court finds as follows:


         In March 2006, plaintiff Robin Hartley executed a promissory note for $500, 800.00, payable to the order of First Magnus Financial Corp. Decl. of Douglas A. Johns (Dkt. # 9), Ex. 2.[1] The note was secured by a deed of trust on real property located at 17134 111th Ave. NE, Bothell, Washington. Id., Ex. 3. The deed of trust lists First Magnus as the lender, Stewart Title as the trustee, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as both the beneficiary of the trust and the “nominee” for the lender. Id.

         Plaintiffs began having trouble making their mortgage payments in 2008. At the time, Countrywide Home Loans Servicing LP was servicing plaintiffs' mortgage and communicated with them regarding amounts past due and its intent to accelerate the loan. Id., Exs. 4, 5, and 30. On or about April 29, 2009, Robin Hartley and BAC Home Loans Servicing, LP (identifying itself as the lender) agreed to modify the loan, amending and supplementing the original note and deed of trust to increase the principal balance to $525, 243.52 and to reduce the annual interest rate. Robin Hartley signed the Loan Modification Agreement on May 19, 2009. Id., Ex. 6. The modification was not countersigned until three years later, by which time BAC Home Loans Servicing, LP had merged into BoA. BoA's endorsement appears on a separate page dated September 10, 2012. Id., Ex. 7.

         Plaintiffs made their last payment on the loan in July 2009.

         In April 2012, MERS purportedly assigned its interests as beneficiary of the deed of trust to Bank of New York Mellon, as trustee for the certificate holders of CWMBS. (hereinafter, “CWMBS”). Id., Ex. 9. In January 2013, a law firm acting on behalf of an unidentified “Deed of Trust Beneficiary” notified plaintiffs that they were in default. The notice identified CWMBS as the owner of the note and BoA as the servicer. Id., Ex. 10. Plaintiffs requested mediation, and the matter was referred by the Washington Department of Commerce. Months passed while BoA decided whether or not it wanted to pursue the notice of default, pursue mediation, and/or offer a loan modification. Id., Ex. 30. Whatever efforts BoA was prepared to make were cut off when the servicing of the loan was transferred to defendant Residential Credit Solutions, Inc. (“RCS”) in or before September 2013. Id., Exs. 12, 13, and 30. The mediator ultimately concluded that the Beneficiary had not participated in mediation in good faith under RCW 61.24.163(14) and (16). Id., Ex. 29. The mediator specifically found that:

[T]he practice and behavior of the Beneficiary servicers (first Bank of America and subsequently Residential Credit Servicing) seem out of compliance with the provisions of the [Washington State Foreclosure Fairness Act]. There was considerable dysfunction with regard to instructions delivered to their respective counsel/representatives as well as a curious lack of responsiveness given the requests by their counsel for guidance and direction. There [w]as also multiple and confusing communication from the [Beneficiary]/servicers directly to the Borrowers. . . . In this particular case the counsels/representatives for the beneficiary sought to move the process along but were stymied in their efforts by their clients. . . . For a mediation process to extend for more than two years by virtue of two major transfers (one as to servicer and a second at a later date to a different counsel) by the Beneficiary has definitely disadvantaged the Borrower's right to a timely and fair hearing whilst in mediation . . . .

Id., Ex. 29.

         Defendants seek dismissal of plaintiffs' claims of quiet title, breach of the covenant of good faith and fair dealing, negligence, intentional infliction of emotional distress, and violations of the Washington Lending and Homeownership Act, the Washington Consumer Protection Act, the Fair Debt Collections Practices Act, and 12 C.F.R. § 1024.41(c)(1).[2] The question for the Court in this context is whether the facts alleged in the complaint or shown by the attached exhibits present a “plausible” ground for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

A claim is facially plausible when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Plausibility requires pleading facts, as opposed to conclusory allegations or the formulaic recitation of elements of a cause of action, and must rise above the mere conceivability or possibility of unlawful conduct that entitles the pleader to relief. Factual allegations must be enough to raise a right to relief above the speculative level. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief. Nor is it enough that the complaint is factually neutral; rather, it must be factually suggestive.

Somers v. Apple, Inc., 729 F.3d 953, 959-60 (9th Cir. 2013) (internal quotation marks and citations omitted). All well-pleaded factual allegations are presumed to be true, with all reasonable inferences drawn in favor of the non-moving party. In re Fitness Holdings Int'l, Inc., 714 F.3d 1141, 1144-45 (9th Cir. 2013). If the complaint fails to state a cognizable legal theory or fails to provide sufficient facts to support a claim, dismissal is appropriate. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010).

         A. Quiet Title

         Plaintiffs allege that any action to foreclose their deed of trust is barred by the applicable statute of limitations and that they are therefore entitled to quiet title under RCW 7.28.300. Dkt. # 1 at ¶ 111. BoA has no ownership or possessory interest in the property, however, nor does it claim such an interest. It is therefore not a proper defendant to a quiet title action. See Kobza v. Tripp, 105 Wn.App. 90, 95 (2001). Plaintiffs acknowledge that their quiet title claim against BoA fails as a matter of law, but argue that BoA should remain a defendant on this claim - even though there can be no liability - so that it can provide information regarding the amount of the debt that is no longer enforceable. Complete relief on the claim can be had without BoA's involvement, however. Nor is the ...

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